Det er haap i det hengende snoere ... Delta hadde planlagt aa file Ch. 11 mandag, men forhandler fortsatt med pilotene. I tillegg har de funnet eksra finansiering - dvs. HVIS de kommer til enighet. (Paster hele artikkelen - ajc er passordbeskyttet)
$600 million on Delta's horizon
American Express will try to help airline avoid bankruptcy, but only if deal with pilots is reached.
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 10/25/04
Juggling deals in a bid to avoid a bankruptcy filing as soon as this week, Delta Air Lines said Monday it has a commitment for up to $600 million in much-needed cash from credit card giant American Express.
But the deal is conditioned on Delta also getting a long-sought pilot pay cut deal, and talks between the airline and its pilots union continued into Monday evening without an agreement.
The deal with American Express includes a $100 million loan that Delta said is part of a package still being negotiated with other unnamed lenders.
American Express also agreed to prepay Delta $500 million toward its purchases of SkyMiles over the next two years, according to Delta. American Express issues SkyMiles to users of a Delta-branded credit card.
Wall Street welcomed the news as a sign of progress in Delta's effort to stitch together enough deals with pilots, bondholders and other creditors to avoid a Chapter 11 case after three years of huge losses.
"It indicates that Delta, under certain circumstances, can find capital," said Richard Bittenbender of Moody's Investors Service. He said the deal will boost cash reserves and send a positive signal to pilots and other parties.
Delta shares — which probably would be wiped out in a bankruptcy case — rose almost 17 percent, to $3.78.
However, in a regulatory filing that accompanied Monday's announcement, Delta acknowledged that the deal includes protections for American Express if it goes into bankruptcy court anyway. Delta said it would ask the court to put Amex at the head of the line for future repayment.
Delta and pilots union negotiators resumed discussions Monday afternoon at the Air Line Pilots Association headquarters outside Washington. They had several days of talks in Florida last week.
Union not happy yet
Delta wants a 35 percent pay cut and other savings that would roughly halve the company's $2 billion pilot payroll.
The union said "significant issues" remained unresolved. "We expect this process to continue throughout the evening," a spokesman said in a message to members late Monday afternoon.
Meanwhile, a deadline looms today for another element of Delta's bankruptcy avoidance efforts — a debt exchange offer in which holders of certain bonds are being asked to turn them in for ones that mature later. That would help Delta trim costs related to a nearly $21 billion debt load.
A similar exchange offer last month drew tepid response, but some bond analysts expect this one to do better.
Delta has said it also is in private talks with other debtholders, aircraft lessors and vendors as part of an effort to restructure its finances without a bankruptcy case.
Trying to buy time
Delta said Monday that it reached a deal to defer for two years $135 million in bonds that were to come due next year. The airline said it also will issue stock with the new debt, which will be exchanged for full value.
A bankruptcy filing would let Delta keep flying with little effect on passengers, but it would shift control over the company's future to a bankruptcy judge and high-priority creditors.
If Delta gets the pilot concessions and other deals, some analysts think the airline will buy itself enough time to try to let its recovery plan work without a trip to court. The airline recently laid out plans for up to 7,000 job cuts in coming months and 10 percent pay cuts for remaining workers. It's also closing its Dallas hub this winter.
But others note that record fuel prices and persistent fare wars undercut such cost-cutting steps, and they regard a Chapter 11 case as likely in any event.
Delta last week posted a $651 million third-quarter loss and said its cash has dipped below the $1.5 billion mark that analysts think means a bankruptcy filing is imminent. A lesser amount would give the company less flexibility during a bankruptcy case.
"As our September quarter 2004 losses demonstrate, time is now very critical for Delta," Chief Executive Officer Gerald Grinstein said in a press release. "American Express' role in Delta's transformation process demonstrates the commitment and determination of one of our key stakeholders in restructuring the company."
Some Delta watchers say the airline could decide to file Chapter 11 as soon as Wednesday if negotiations with its pilots and others aren't going well. But it also could extend today's debt exchange offer and keep talking to pilots if they are.
The deals have become increasingly intertwined. Like the American Express financing, the debt exchange is conditioned on a deal with pilots. At the same time, the pilots union has insisted that other stakeholders contribute to the company's recovery effort before pilots agree to cuts.
That means announcements of progress in one area could be aimed partly at influencing talks in another.
The American Express deal "would indicate good faith to the pilots that Delta is trying to restructure everything, rather than surviving on the backs of labor," said Bittenbender.
Unspecified collateral
American Express has a key stake in Delta's future, processing millions of fare purchases. Delta said it also extended its agreement with American Express to continue offering a frequent flier credit card.
Delta said it will get the SkyMiles prepayments in two installments of $250 million each, with the first occurring when all conditions are met and the second 90 days later.
Delta said it will put up unspecified collateral for the financing from American Express Travel Related Services.
The airline's cash coffers also stand to get a boost from two announced asset sales — of surplus aircraft and a stake in Orbitz.com — that should bring it about $350 million when they close.
Also, airlines have recently raised fares to offset the rise fuel prices, and that helps cash flow.
$600 million on Delta's horizon
American Express will try to help airline avoid bankruptcy, but only if deal with pilots is reached.
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 10/25/04
Juggling deals in a bid to avoid a bankruptcy filing as soon as this week, Delta Air Lines said Monday it has a commitment for up to $600 million in much-needed cash from credit card giant American Express.
But the deal is conditioned on Delta also getting a long-sought pilot pay cut deal, and talks between the airline and its pilots union continued into Monday evening without an agreement.
The deal with American Express includes a $100 million loan that Delta said is part of a package still being negotiated with other unnamed lenders.
American Express also agreed to prepay Delta $500 million toward its purchases of SkyMiles over the next two years, according to Delta. American Express issues SkyMiles to users of a Delta-branded credit card.
Wall Street welcomed the news as a sign of progress in Delta's effort to stitch together enough deals with pilots, bondholders and other creditors to avoid a Chapter 11 case after three years of huge losses.
"It indicates that Delta, under certain circumstances, can find capital," said Richard Bittenbender of Moody's Investors Service. He said the deal will boost cash reserves and send a positive signal to pilots and other parties.
Delta shares — which probably would be wiped out in a bankruptcy case — rose almost 17 percent, to $3.78.
However, in a regulatory filing that accompanied Monday's announcement, Delta acknowledged that the deal includes protections for American Express if it goes into bankruptcy court anyway. Delta said it would ask the court to put Amex at the head of the line for future repayment.
Delta and pilots union negotiators resumed discussions Monday afternoon at the Air Line Pilots Association headquarters outside Washington. They had several days of talks in Florida last week.
Union not happy yet
Delta wants a 35 percent pay cut and other savings that would roughly halve the company's $2 billion pilot payroll.
The union said "significant issues" remained unresolved. "We expect this process to continue throughout the evening," a spokesman said in a message to members late Monday afternoon.
Meanwhile, a deadline looms today for another element of Delta's bankruptcy avoidance efforts — a debt exchange offer in which holders of certain bonds are being asked to turn them in for ones that mature later. That would help Delta trim costs related to a nearly $21 billion debt load.
A similar exchange offer last month drew tepid response, but some bond analysts expect this one to do better.
Delta has said it also is in private talks with other debtholders, aircraft lessors and vendors as part of an effort to restructure its finances without a bankruptcy case.
Trying to buy time
Delta said Monday that it reached a deal to defer for two years $135 million in bonds that were to come due next year. The airline said it also will issue stock with the new debt, which will be exchanged for full value.
A bankruptcy filing would let Delta keep flying with little effect on passengers, but it would shift control over the company's future to a bankruptcy judge and high-priority creditors.
If Delta gets the pilot concessions and other deals, some analysts think the airline will buy itself enough time to try to let its recovery plan work without a trip to court. The airline recently laid out plans for up to 7,000 job cuts in coming months and 10 percent pay cuts for remaining workers. It's also closing its Dallas hub this winter.
But others note that record fuel prices and persistent fare wars undercut such cost-cutting steps, and they regard a Chapter 11 case as likely in any event.
Delta last week posted a $651 million third-quarter loss and said its cash has dipped below the $1.5 billion mark that analysts think means a bankruptcy filing is imminent. A lesser amount would give the company less flexibility during a bankruptcy case.
"As our September quarter 2004 losses demonstrate, time is now very critical for Delta," Chief Executive Officer Gerald Grinstein said in a press release. "American Express' role in Delta's transformation process demonstrates the commitment and determination of one of our key stakeholders in restructuring the company."
Some Delta watchers say the airline could decide to file Chapter 11 as soon as Wednesday if negotiations with its pilots and others aren't going well. But it also could extend today's debt exchange offer and keep talking to pilots if they are.
The deals have become increasingly intertwined. Like the American Express financing, the debt exchange is conditioned on a deal with pilots. At the same time, the pilots union has insisted that other stakeholders contribute to the company's recovery effort before pilots agree to cuts.
That means announcements of progress in one area could be aimed partly at influencing talks in another.
The American Express deal "would indicate good faith to the pilots that Delta is trying to restructure everything, rather than surviving on the backs of labor," said Bittenbender.
Unspecified collateral
American Express has a key stake in Delta's future, processing millions of fare purchases. Delta said it also extended its agreement with American Express to continue offering a frequent flier credit card.
Delta said it will get the SkyMiles prepayments in two installments of $250 million each, with the first occurring when all conditions are met and the second 90 days later.
Delta said it will put up unspecified collateral for the financing from American Express Travel Related Services.
The airline's cash coffers also stand to get a boost from two announced asset sales — of surplus aircraft and a stake in Orbitz.com — that should bring it about $350 million when they close.
Also, airlines have recently raised fares to offset the rise fuel prices, and that helps cash flow.
